Health care and industrial companies lead US stocks lower
Companies that distribute or sell prescription drugs continued to slide following speculation that Amazon plans to get into that business, something the company has not confirmed.
Banks dipped after a big rally over the last month and technology companies continued to climb. Smaller, more domestically-focused companies declined as investors tried to gauge the odds for tax cuts.
Stocks have rallied over the last two weeks as investors hope tax cuts proposed by the Trump administration and Congressional Republicans will boost corporate profits. But over the weekend President Donald Trump entered a war of words with Senator Bob Corker, a retiring Republican who has a reputation as a budget hawk. Republicans have a narrow majority and losing just a few votes could derail a bill.
“There really is not much leeway there,” said Mona Mahajan, U.S. investment strategist for Allianz Global Investors. “They somehow have to get their act together.”
The Standard & Poor’s 500 index dipped 4.60 points, or 0.2 percent, to 2,544.73. The Dow Jones industrial average shed 12.60 points, or less than 0.1 percent, to 22,761.07. The Nasdaq composite fell 10.45 points, or 0.2 percent, to 6,579.73, which ended a nine-day winning streak. The Russell 2000 index of smaller-company stocks lost 6.66 points, or 0.4 percent, to 1,503.56.
Stock trading was light because of the Columbus Day holiday in the U.S. Bond trading was closed.
General Electric slipped after it named Ed Garden of Trian Fund Management to its board of directors. Trian, a well-known activist investment firm founded by Nelson Peltz, has been pushing the conglomerate to slim down. GE lost 96 cents, or 3.9 percent, to $23.43. It’s down 26 percent this year.
GE has announced slew of changes in its leadership this month. John Flannery replaced Jeffrey Immelt as CEO a week ago, several months ahead of the schedule the company announced in June. On Friday GE said Chief Financial Officer Jeffrey Bornstein will leave at the end of the month. Two vice chairs are also retiring.
Health care companies did worse than the rest of the market. Companies that distribute or sell prescription medicines or administer prescription drug benefits tumbled for a second day as investors continued to worry about Amazon entering the prescription drug business. Analysts raised that possibility Friday. Amazon has declined to comment.
Pharmacy benefits manager Express Scripts lost $3.14, or 5 percent, to $59.22 and prescription drug distributor McKesson dropped $3.15, or 2.1 percent, to $148.14 while Walgreens gave up $2.33, or 3.2 percent, to $70.87, its lowest close in more than a year and a half.
Medical device maker Medtronic gave up $2.88, or 3.6 percent, to $76.93. The company said late Friday that Hurricane Maria will reduce its quarterly profit and revenue by about $250 million. Medtronic has four facilities in Puerto Rico that were damaged by the storm and manufacturing won’t fully recover for weeks.
Third-quarter earnings reports will start later this week when major banks start announcing their results. Investors expect continued strong results from technology companies. The industry has led the market higher for most of this year. Chipmaker Nvidia added $4.09, or 2.3 percent, to $185.39 and cloud computing company Citrix Systems gained $1.15, or 1.4 percent, to $80.62.
Three major hurricanes hit the U.S. in the last two months, and experts expect that to affect economic growth and corporate profits.
“One of the sectors that we think is going to get hit is the insurance sector because they’re going to be paying out all these claims,” said Mahajan, of Allianz. She said the storms will reduce third-quarter economic growth by 0.4 percent. Historically, the economy bounces back from major storms quickly as people rebuild damaged areas.
Electric car maker Tesla declined after the Wall Street Journal reported on the company’s struggles in producing its new, lower-priced Model 3 Sedan. The Journal reported Friday that Tesla workers were making some Model 3 parts by hand as recently as September. Last week Tesla missed its third-quarter production goals. The stock fell $13.94, or 3.9 percent, to $342.94.
Benchmark U.S. crude rose 29 cents to $49.58 a barrel in New York as Tropical Storm Nate moved away from the Gulf Coast, where much of U.S. crude is drilled and processed. Nate hit Southeastern Louisiana Saturday evening and Mississippi on Sunday, but was downgraded to a tropical depression by midday Sunday.
Brent crude, used to price international oils, added 17 cents to $55.79 a barrel in London.
Wholesale gasoline stayed at $1.56 a gallon. Heating oil lost 1 cent to $1.74 a gallon. Natural gas shed 3 cents to $2.83 per 1,000 cubic feet.
Gold added $10.10 to $1,285 an ounce. Silver climbed 18 cents, or 1.1 percent, to $16.97 an ounce. Copper remained at $3.03 a pound.
The dollar slipped to 112.69 yen from 112.71 yen. The euro rose to $1.1752 from $1.1735.
The DAX in Germany rose 0.2 percent and the CAC 40 of France added 0.1 percent. The British FTSE 100 fell 0.2 percent. Hong Kong’s Hang Seng lost 0.5 percent. Markets in Japan and South Korea were closed for holidays.